November natural gas is set to open 6 cents higher Tuesday morning as traders focus on the continuing dynamic of storage surplus contraction. Overnight oil markets rose.
Analysts see the dynamic of continued decreases in the storage surplus as keeping a firm tone to the market. “The fact that this narrowing in the surplus is apt to continue through the remaining few weeks of the injection cycle without any significant assistance from either the temperature or storm factors attests to subsurface bullish developments that could keep values well supported, especially if the late fall period proves unusually cold,” said Jim Ritterbusch of Ritterbusch and Associates in a Tuesday morning report to clients.
“Looking ahead through the rest of this week, short speculative position holders still appear on the defensive as a result of this month’s considerable chart improvement. Although a test of last week’s highs at the $3.36 area per November futures appears unlikely during the next couple of sessions, any bullish surprises in Thursday’s storage report could easily force a run at this resistance. We will be viewing any injection of less than 70 Bcf as a bullish figure capable of keeping this short-term bull market alive.”
Forecasters continue to see diminished heating and cooling load. WSI Corp. in its Tuesday morning outlook said, “[Tuesday’s] 11-15 day forecast is cooler than yesterday’s forecast over the eastern half of the nation but warmer over the West. PWCDDs are down 0.7 for days 11-14 and are only forecast to be 6.8 for the period. GWHDDs are up 4.4 to 53.9, which are still almost 12 below average.
“Forecast confidence is a touch below average due to diverging model solutions that begin late in the six-10 day period. There are also conflicting signals between the Pacific and high-latitude patterns.”
Tom Saal, vice president at FCStone Latin America, in his work with Market Profile expects the market to test Monday’s value area at $3.248 to $3.230 and “should test $3.296 to $3.272. Eventually the market should test $3.053 to $3.013.”
In overnight Globex trading November crude oil rose 24 cents to $50.18/bbl and November RBOB gasoline gained fractionally to $1.4964/gal.
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